The Section 80GG deduction lets an individual or Hindu Undivided Family claim a deduction for rent paid on their own accommodation when their salary does not include House Rent Allowance. The maximum benefit is ₹5,000 per month, or ₹60,000 for the year, and the actual amount you can claim is the lowest of three formulas based on your rent and income. One catch trips up most claimants: it is available only under the old tax regime.
Old Regime Only
Section 80GG is not available under the new tax regime. Section 115BAC, which is now the default, blocks most Chapter VI-A deductions, and 80GG is among those blocked.1Income Tax Department. FAQs on New Tax vs Old Tax Regime To claim it, you have to opt out of the new regime by filing Form 10IEA before your return due date.
Whether opting out actually saves you money depends on your total deductions. Add up Section 80GG together with your 80C, 80D and other Chapter VI-A claims, then compare the tax saved against what the lower slab rates under the new regime would save. Run both computations before you commit.
Who Can Claim It
Only individuals and Hindu Undivided Families qualify. Companies, firms, and other entities cannot use this section. Beyond entity type, every one of these conditions must hold:
- No House Rent Allowance received from any employer at any point during the financial year. This is the core condition. Even if your employer paid HRA and you chose not to claim the exemption, you still cannot switch to Section 80GG.
- Neither you, your spouse, your minor children, nor any HUF of which you are a member owns residential property in the city where you live or work.
- You do not own a residential property elsewhere that you treat as self-occupied for tax purposes. If the other-city property is let out or deemed let out, the restriction does not apply.
- You file a declaration in Form 10BA on the e-filing portal on or before your return due date.
Both salaried employees whose pay structure lacks HRA and self-employed professionals can claim, so long as every condition above is met.2Income Tax Department. Non-Resident Individual for AY 2026-2027 The property rule is where people slip. Owning a small flat in the same city where you rent disqualifies you, and ownership through your HUF counts too.
How Much You Can Deduct
Your deduction is the lowest of three amounts. Calculate all three:
- ₹5,000 per month. This flat cap means the deduction can never exceed ₹60,000 in a year, whatever rent you actually pay.
- 25% of adjusted total income.
- Rent paid minus 10% of adjusted total income.
The smallest of the three is what you deduct.2Income Tax Department. Non-Resident Individual for AY 2026-2027
What Adjusted Total Income Means
Adjusted total income is not the same as gross total income. Start with gross total income and strip out:
- Long-term capital gains
- Short-term capital gains taxed under Section 111A
- Income from foreign sources taxable under Sections 115A, 115AB, 115AC, or 115AD
- All Chapter VI-A deductions (Sections 80C through 80U) except Section 80GG itself
What remains is your adjusted total income. It is usually lower than gross total income, which makes the 10% subtraction in the third limit smaller and your deduction slightly larger. If you get this figure wrong, the whole calculation is wrong, so recheck it before filing.
Worked Example
Say your gross total income for FY 2025-26 is ₹8,00,000. You have ₹1,50,000 in Section 80C deductions and no capital gains. Adjusted total income is ₹6,50,000. You pay ₹12,000 monthly rent, or ₹1,44,000 a year.
- Limit 1: ₹5,000 × 12 = ₹60,000
- Limit 2: 25% of ₹6,50,000 = ₹1,62,500
- Limit 3: ₹1,44,000 − ₹65,000 = ₹79,000
The lowest is ₹60,000, so that is your deduction. For most taxpayers paying moderate-to-high rent, the ₹5,000 monthly cap is the binding limit. Your adjusted total income would have to be very low for one of the other two figures to fall below ₹60,000.
Form 10BA and Supporting Records
Form 10BA is not optional. Without it, the deduction is disallowed even if you meet every other condition. It is a declaration confirming that you do not own residential property at your place of residence or employment and that you are paying rent for your own accommodation. File it electronically on the income tax portal on or before your return due date. For FY 2025-26 (AY 2026-27), the due date is 31 July 2026 for most taxpayers, or 31 October 2026 if your accounts require a tax audit.2Income Tax Department. Non-Resident Individual for AY 2026-2027
The form asks for:
- Your name, PAN, and full address
- The rental period and total rent paid
- Mode of payment (bank transfer, cheque, cash)
- Your landlord’s name and address
- Your landlord’s PAN if annual rent exceeds ₹1,00,000
- A declaration that neither you, your spouse, your minor child, nor any HUF you belong to owns residential property at your place of residence or employment
Once annual rent crosses ₹1,00,000, the landlord’s PAN is mandatory. If your landlord does not have one, the law does not spell out an alternative. In practice, some taxpayers obtain a signed declaration from the landlord stating they do not hold a PAN, though this is not a formally recognized substitute. Getting the landlord’s PAN before you sign the lease avoids the problem.
Keep your rent receipts and bank statements showing the payments. The department does not require you to upload these while filing, but they will be asked for in a scrutiny assessment. A written rental agreement strengthens the claim if it is questioned later.
Filing the Claim
There are two stages. First, submit Form 10BA on the e-filing portal through the e-File menu under income tax forms. Save the acknowledgement number the system generates.3Income Tax Department. Income Tax Department e-Campaign
Second, when you file your return (ITR-1, ITR-2, or ITR-4 depending on your income sources), enter that acknowledgement number in Schedule 80GG and enter the deduction amount under Chapter VI-A with the Section 80GG code.4Income Tax Department. Notification No. 45/2026 – Income-tax (Second Amendment) Rules, 2026 Check the computation summary to confirm your taxable income has dropped by the expected amount before you verify and submit.
Rent Paid to Parents
You can claim Section 80GG on rent paid to a parent. It is a legitimate arrangement that many families use. The conditions are simple: a genuine rental agreement, rent that actually changes hands (preferably by bank transfer), and the parent reporting the rent as income on their own return.
This works because the ownership restriction covers your spouse, minor children, and HUF, but not your parents. If you live in your father’s house and pay him rent under a proper agreement, the deduction stands. The arrangement has to be real, though. Fabricating an agreement with a family member without actually paying rent is exactly the pattern that triggers scrutiny, and the penalties are heavy.
Penalties for Inflated or False Claims
A bogus rent deduction, or an inflated rent figure, is treated as underreporting or misreporting of income. The severity depends on intent. If the assessing officer concludes you made a genuine calculation error or reported the wrong figure, it falls under underreporting, carrying a penalty of 50% of the tax payable on the unreported amount.
If the officer finds you deliberately fabricated rent receipts, invented a landlord, or claimed a deduction you knew you were not entitled to, it becomes misreporting. That attracts a penalty of 200% of the tax payable on the misreported income. Interest on the unpaid tax from the original due date is charged on top.
The department has become much better at cross-referencing landlord PAN data against reported rental income. Report ₹1,50,000 in rent paid to a landlord whose return shows no rental income, and the mismatch surfaces. That is precisely the kind of discrepancy that produces a notice under the computer-assisted scrutiny selection system.